Correlation Between BANK MANDIRI and Amazon

Can any of the company-specific risk be diversified away by investing in both BANK MANDIRI and Amazon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BANK MANDIRI and Amazon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK MANDIRI and Amazon Inc, you can compare the effects of market volatilities on BANK MANDIRI and Amazon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BANK MANDIRI with a short position of Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK MANDIRI and Amazon.

Diversification Opportunities for BANK MANDIRI and Amazon

-0.87

Correlation Coefficient

BANK MANDIRI  Amazon

Pay attention - limited upside

The 3 months correlation between BANK and Amazon is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding BANK MANDIRI and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc and BANK MANDIRI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BANK MANDIRI are associated (or correlated) with Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of BANK MANDIRI i.e., BANK MANDIRI and Amazon go up and down completely randomly.

Pair Corralation between BANK MANDIRI and Amazon

Assuming the 90 days trading horizon BANK MANDIRI is expected to under-perform the Amazon. In addition to that, BANK MANDIRI is 1.44 times more volatile than Amazon Inc. It trades about -0.09 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.26 per unit of volatility. If you would invest  17,468  in Amazon Inc on October 25, 2024 and sell it today you would earn a total of  4,887  from holding Amazon Inc or generate 27.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

BANK MANDIRI  vs.  Amazon Inc

BANK MANDIRI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BANK MANDIRI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Amazon Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Amazon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BANK MANDIRI and Amazon

The main advantage of trading using opposite BANK MANDIRI and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK MANDIRI position performs unexpectedly, Amazon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Amazon will offset losses from the drop in Amazon's long position.

The idea behind BANK MANDIRI and Amazon Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .